Amazon & PayPal Sales
Accepting Amazon Payments Through TransferWise, WorldFirst or OFX
What Are The Costs Of Using Amazon Or PayPal?
If you sell products through an online international marketplace like Amazon or Shopify, you’ll know that dealing with foreign currency can be costly.
If you don’t have a bank account set up in the country that you’re selling, you’re pretty much at the mercy of your payment gateway. The fees and rates charged by PayPal can be over 4.4% plus a fixed fee on international sales. Amazon exchange rates can be similar. You should always check your rate against the interbank rate when using Amazon or PayPal to receive foreign currency.
These kinds of fees and FX rates can have a massive effect on your bottom line. Especially if you’re selling a high quantity of goods with a lower margin.
Luckily a few FX providers have come to the rescue to help you keep a healthy margin. The TransferWise Borderless Account, WorldFirst World Account, and OFX eCommerce Account are all free to set up and can provide a much cheaper alternative to Amazon and PayPal.
How it Works
- The FX Provider that you choose will give you access to local bank accounts in the country that you’re selling in, Eg. A USD bank account in the USA
- Open up for Amazon Seller Central account and go to: Settings >Account Info > Payment Info > Bank Account Info
- Add the new banking details provided by your FX Provider. That will be in the form of a routing number for the USA. An IBAN in Europe, a BSB and Account number in Australia, etc.
- Save, and you’re done.
Now instead Amazon exchanging the funds for you, you’ll have access to your funds with a dedicated FX provider.
Making Supplier Payments
There can also be a lack of flexibility when using the likes of Amazon to receive international payments. Revenue from sales is sent to your bank account periodically, at the will of Amazon. This means that:
- You have no way on controlling when you receive the money, so you’re at the mercy of FX fluctuations. And,
- If you purchase goods in the same currency that you sell them. You may be hit with a double FX conversion!
Real Life Scenario
ABC is an online store based in Australia. They buy goods out of China using USD and sell these goods in the US to the value of USD$1,000.
Using Amazon To Exchange FX
- ABC sells USD$1,000 worth of goods
- Amazon exchanges the USD$1,000(less any other Amazon fees) to AUD in up to 14 days.
- ABC receives AUD at 3% below the market rate(this may vary depending on your agreement with Amazon. Please check your own exchange rates with Amazon)
- ABC then has to purchase goods from China using USD, so they use their bank or FX provider, and pay additional rates and/or fees.
Using An FX Provider Like TransferWise or WorldFirst
- ABC sells USD$1,000(less any Amazon fees) worth of goods on Amazon and receives all funds into their FX account, located in the US.
- ABC uses some a portion of the USD$1,000 to purchase more goods. This is a same currency transaction which is free or costs a small amount from their FX Provider.
- ABC returns exchanges the remaining USD to AUD at a rate agreed with by their FX provider(Rates may vary from 0.5% to 2%)